Shakeout

229
Mon, Sep 19, 2011 - 11:24am

The Turd awoke this morning to the disturbingly familiar LBMA/Comex beatdown pattern we've seen so frequently in the past. This stuff is sure getting old but, unwittingly, it appears that The Cartel is about to hand us an extremely attractive opportunity.

First, take a look at this 5-minute chart. It's a classic, coordinated attack pattern. Word leaks on the LBMA that The Cartel is going to raid the metals today. Down spikes ensue as those with foreknowledge prepare for the event. The Comex opens and BOOM!

paper_9-19amgold5.jpg

If I were you, I would print this chart and tape it above my computer. In the future whenever you see this pattern, you'll know what's coming.

OK, onto the expected buying opportunity. It's not today...at least I don't think so...but it is coming very soon. My problem is that I have very little cash. I foolishly plunged last week when I thought we'd seen a bottom at 1800. Oops. I'm also long a bunch of Nov11 soybean calls that look like they have the potential to generate some continued losses to pair up versus all of my gains from the PMs earlier this year. Oh well, whaddayagonnado?

First, let's look at gold. It could stop and reverse right near last week's lows. It could. I don't think it will, however. Let's put the likelihood of a turn near 1770-80 at 25%. More likely is a drop all the way toward the trendline from August 8. What is the significance of that date, you ask? It is the low from the gap higher opening after the U.S debt downgrade. See the charts below. At any rate, I think it's 75% likely that gold falls all the way 1740 or so. At that point, if I had any cash, I'd be all over it. Unfortunately, I don't so I'm reduced to being a very interested spectator in this one.

paper_9-19amgold2.jpgpaper_9-19amgold6.jpg

Silver has fallen in line and looks roughly the same. Recall last week I mentioned that crude looked subject to a drop back to 82-85 and, if that happened, it would surely take a toll on silver. Well, nuts, that seems to be playing out. IF gold drops toward 1740, silver will have to deal with continued selling pressure. However, it now has a chart that is similar to gold. It should have substantial support near $38 or so. You can plainly see it on the longer term charts below.

paper_9-19amsilv2.jpg

paper_9-19amsilv6.jpgpaper_9-18pmsilvw_0.jpg

Again, please understand that the days of this crappy, LBMA/Comex paper metal monopoly are numbered. "The futures 'tail' will only wag the spot 'dog'" for a little while longer. Be patient and have faith. Use this weakness against them. Buy physical and take delivery. It is truly your only protection against the madness ahead. TF

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  229 Comments

Dr G
Sep 19, 2011 - 4:35pm

@Austrian. My two cents

@Austrian. My two cents (which will invariably differ from every other poster). I would post in more detail but I'm simply too busy at the moment:

1) What would be the most appropriate allocation of gold vs. silver? i.e. 50% gold and 50% silver?

I'd do 30% gold and 70% silver in terms of money spent. If it were 5 years prior I'd probably have that reversed. For bang for the buck, silver should have more upside potential at this point. I would also build a nice base of metals now (say 50% of the money), with the remaining amount to be invested in 10% increments over the next 5-6 months. This will get them a nice protective base as well as allow some buying of dips as they occur. Even in the midst of the bull market those dips will occur, either due to manipulation and sell-off or profit taking. Because you are talking a large sum of money, it would be nice to capitalize on some of those dips with dry powder.

2) Where would be the best place to buy our physical metals? i.e. GoldMoney, SprottMoney, Bank of Nova Scotia? a coin dealer?

​I'm not familiar with Canadian sales, so somebody else will have to answer this. Some of the answer to this may relate to question #3.

3) What would be the best form of bullion to buy? i.e. coins? bars (how many ounces per bar)? Again, we are looking for the most competitive premiums and want to be able to sell without any problems...so I guess what I'm getting at is what form of bullion would be the easiest to sell.

​This won't really be an issue when it comes time to sell. I have a nice mix of government coins, as well as bars and loafs. The best premiums and no problems selling would probably be larger bars by reputable names. Think 100 oz bars. I don't think I'd go any bigger than that. For the gold, I like Krugs as they have a cheap premium and are widely recognized. You'll get no issues selling them. It is also nice to become friends with a local dealer, so that you may sell to them when needed.

4) Is it safe to keep our bullion in a safety deposit box in a Canadian bank?

​Probably as safe as any other place, but I would NOT store 100% of it there. I wouldn't store 100% of any investment in one place, no matter the investment. Diversification in location will protect your parents.

5) Here is a scenario: if we bought 50% silver, it would be quite bulky. Since my parent's live in an apartment in a not so great neighbourhood, I don't feel that it would be wise to store in their apartment. Also, I don't think 100k worth of silver would fit into a safety deposit box at a Canadian bank. For security purposes, would we be better off storing such a large amount of metals with a business like Goldmoney and hiding our physical gold with a family member at their home?

With that amount of physical metals, the best bet is to spread it out. For me personally, I'm storing metals in 3 different states. Within each of those US states I have various methods that I'm using. Some are literally buried the ground (pirate style..ARRG!), some are hidden in the home, some are in a safe, etc. It is good to have access to some of it quickly if need be.

Henry Frap
Sep 19, 2011 - 4:36pm

RE; Physical PM taxes

@ all responders-

Thanks fellow Turdites, am envious of your state's freedom to purchase at true PM value. (Now to call around...)If I were to purchase for delivery online, any favorite dealers?

Thanks again!

Henry Frap Henry Frap
Sep 19, 2011 - 4:37pm

@Keg- Thank you!

@Keg- Thank you!

pmahler
Sep 19, 2011 - 4:40pm

bottom calling

"In quantum mechanics, the Heisenberg uncertainty principle, sometimes called the principle of indeterminacy, states a fundamental limit on the accuracy with which certain pairs of physical properties, such as the position and momentum of a particle, can be simultaneously known. In other words, the more precisely one property is measured, the less precisely the other can be controlled, determined, or known."

We know that the price of gold is going up. There is no way to precisely predict how it's going to happen.

redwood
Sep 19, 2011 - 4:42pm

Austrian

Don't know where you live in Canada, because delivery and transportation are an issue. If you are on the west coast, or western Canada, I would suggest contacting Jeff Neilsen of BullionbullsCanada. If you live in Ontario or eastern Canada, I would suggest contacting Harvey Organ (he lives in Toronto) for advice.

As to the ratio of gold and silver, I prefer 1:3 ration respectively, but that is based on projected rate of growth for both metals.

Clubfoolish Clubfoolish
Sep 19, 2011 - 4:47pm

I asked for some counter

I asked for some counter arguments to the idea this guy made that silver is and has been due for a heavy crash down into the single digits at any time.

What I got, and thank you all, were clearly presented, cogent cases for why he is wrong.

What I was looking for, really, was something along these lines:

"Counterarguments? You don't argue with a crazy man-man-man-man, you just move right along to the next, possibly sane, person....nothing to see here folks"

...or...

"Counterarguments? The guy's a farging whack job and shouldn't be taken seriously for even the shortest known lifespan of a mayfly"

cool

Seriously, thanks - still stacking (mostly silver) and holding big wads of miners (some of the best and some of the worst!).

CF

pourty Henry Frap
Sep 19, 2011 - 4:48pm

@online dealers

Henry -

At this point, only two dealers interest me: bulliondirect.com (check out the nucelo exchange) and providentmetals.com.

I use provident when I want to buy "quickly" in bulk. They sell for a low premium over spot with low shipping. If you see a "dip" and want to buy bullion on it, you can buy it here and lock in the price within seconds. I caught the dip down to $1725 several weeks ago, it only lasted less than a minute, but since I was using provident, I was able to grab it when I saw it.

I use bulliondirect's nucleo exchange when I want to buy just a few coins at at time, I can lodge a purchase price and wait until someone hits it (buying dips is much slower here, as it's individuals doing the selling and they don't react so quickly it can take hours or days, and if the price goes back up, you're out of luck). Shipping is cheaper than even provident in my experience. Plus, you can wait to accumulate several purchases before deciding to take delivery, with no storage charge in the meantime.

Both dealers are reputable and I've had no problems with either. I used to use kitco.com, but their premiums are way too high these days and $1000 minimum purchase, plus a huge shipping/insurance charge.

Incidently, the nucleo exchange is also a rather painless way to sell PM's, though I have yet to sell anything... I'm just stackin'...

leeson_was_framed austrian12874
Sep 19, 2011 - 4:49pm

Gold Buying

1. Allocation of Gold to Silver. This depends a lot on your temperament. David Morgan suggests that Gold 25% if you are risk averse. Silver is a wild ride, how would your parents feel about waking up and finding silver down 10%?

Personally I would go with 40% gold for the following reason. If you buy it in a form that is easy to trade, you can trade the gold silver ratio. When the news gets out that paper is going down the tubes, the rich will rush into gold. Gold will sprint ahead for a while and then silver will follow when the masses arrive.

While gold leads you can swop some of it into silver and increase your bullion holding.

2.)As I am not Canadian, can't help with where to buy, except to suggest that you also consider BullionVault. It operates like GoldMoney, but the dealing costs will be much lower with the amounts that you are dealing with. After a while the commision comes down to 0.1% making trading very cheap.

With bars and coins, check on-line there are some very good dealers. Guernsey Mint in the UK and Perth Mint is Australia are highly regarded.

3.)Some coins as possible emergency currecy is a good idea. Silver rather than gold. But before you do this make sure your folks have:

1. A safe place to stay

2. Several months supply of food an water (assume food, water and power may be disrupted)

3. Basic medical kit

4. A camping stove and some spare gas (for cooking)

Once this is done and you have some coins, bars from a good refiner will carry a lower premium.

4) Don't let your bullion near any bank, if you don't hold it, you don't own it. Banks have been caught tampering with stored bullion, when things get bad you can bet they will all be at it.

Your scenario sounds workable.

A few couns at home for emergency use (after food etc, shopping will be risky if things get bad, so it should be kept to a minimum)

Gold Money or Bullion Vault provide safe vaulting of gold in a secure location. Low dealing costs, and separation from the banking system.

Finally pray, we are going to need all the help we can get.

L-W-F

RuNuts question
Sep 19, 2011 - 4:54pm
pourty
Sep 19, 2011 - 4:54pm

Happy Day!!!

Just received four quarter ounce gold dragons in the mail... awesome coins! (picked up 5 silver 2012 kookaburras as well). First time doing business with Apmex. It was a pleasant transaction, even though it was all way overpriced, but I don't really care, I bought these coins 'cause I just like the shiny pictures... I'm sure a year from now the extra premiums I paid will seem miniscule...

Love these coins. Still looking to pick up some 2012 silver dragons, but alas, they seem be very good at hiding...

a_guy_in_hainesville austrian12874
Sep 19, 2011 - 4:56pm

1)  Well I would go with gold

1) Well I would go with gold more than silver. Gold is a monetary asset. The CB's s of the world have it as an asset, and they are still buying. That is not going to change as you have read here. Silver ratio at 45-1. Might it go lower, sure. Then you have to trade back to gold. Will you be able to? Maybe. Probably.

In the end, I think gold will be FAR superior. Might silver be a better trade? Yes.

Will gold be better in the end. Yes.

The other questions others have answered so well I can't help to add to them. But I know I get this first question alot. If they are going to just sit on it, well even more reason to go maybe 90-10. Silver will be a good barter item. Gold will be money.

Good luck to them and you. Good questions.

silver foil hat
Sep 19, 2011 - 5:01pm

I think I figured out why silver is under 40...

No one wants FRNs for their silver.

That's unconventional thinking... If an owner of phyz won't sell you an ounce for $40, then he won't even take ONE FRN for his ounce of silver, the FRN is that worthless.

Well, it makes sense to me, anyway...

Perhaps I'm listening to Sotero's speeches too much.

¤
Sep 19, 2011 - 5:02pm

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https://www.marketwatch.com/story/silver-miners-and-streamers-navigate-controversy-2011-09-19

Boardwalk
Sep 19, 2011 - 5:02pm

@Austrian

Because your parents seem uncomfortable storing in their apartment, they want easy and fast liquidation, they are comfortable with a safety deposit box, and live in Canada, I recommend putting 90 % into one of the Canadian physical bullion funds.

Central Fund of Canada is ~50% gold/50%Silver. https://www.centralfund.com/

Sprott Silver Bullion Fund https://www.sprott.com/Fund1.aspx?id=305

Sprott Gold and Precious Mineral Fund https://www.sprott.com/Fund1.aspx?id=23

They are all safe allocated funds. They are Not Ponzi setups like the US ETFs SLV and GLD. They trade just like stocks through your margin account or RRSP and have the metal to back up your shares.

The remaining 10% dollar wise, I'd use to buy either physical gold or silver in the form of circulated coins (do not buy any coin for numismatic value!) as the opportunity arose. Make it a hobby to visit coin shops, flea markets etc. buying when they find deals. It will help keep them connected to the market.

Here's a great site that tracks the value of circulated Canadian and US coins. https://coinflation.com/

These are my favorite as they carry the lowest premiums over spot, are widely recognized and are in low value per piece which makes them great for any SHTF, Mad Max or other doomer scenario.

BigChief
Sep 19, 2011 - 5:03pm

@The VET

Bullion is fine as dry powder but if you ever want to buy an equity, you must convert it to FRN's. But it is a form of liquidity compared to equities. But it's dollars that you will ultimately need to make purchases. We are not in a hyperinflationary scenario. We are in a deflationary-like driven crisis where individuals are no longer spending money. It's not true deflation, simply money isn't getting into circulation which means banks, business's, consumers are not spending. That is Austrian economics 101 which means their is a demand for FRN's in this enviornment. They are moving into cash. When people want anything more than they want money, that is when we will know the end is near. I still can buy a pound of butter with FRN's that fit in my wallet. Not true in any country that experienced a hyperinflation. When SVM goes on sale for $4.00, I'll be in. Rick Rule "And you’re going to see supply continually constrained as a consequence of the bear market in raw materials that lasted from the early 1980s to the beginning of the last decade. So you have a classic bull market in commodities driven by reduced supply and expanding demand. At the same time that’s happening, you have very bad economic conditions in the developed world. I see a high probability of black swan events. Black swan events are supposed to be asymptomatic, but I see so many black swans on the horizon it feels like a flock of black swans. So I think you’re going to have volatility as these two big trends collide. I think you’ll have liquidity seize-ups, inter-bank lending seize-ups as a consequence of any number of sets of circumstances. I think the volatility that you’ve seen in the last three or four weeks is just a down payment. I think that you’re going to see extended periods of heightened volatility and I think that will be unnerving for most market participants. Given that my own style is event-driven rather than market-driven, I would suspect that while the next 12 months will be unnerving, it will be as good a 12 months in terms of opportunities sets in pricing as I’ve ever observed in my career. SmallCapPower.com: Given that information, should investors sit with a significant portion of their portfolio in cash so that they will be ready to take advantage of some of those opportunities? Rick Rule: Cash or bullion, absolutely. I think liquidity is absolutely critical. Liquidity gives you the ability to take advantage of situations that the market delivers to you. But just as importantly it gives you the courage. It is difficult for somebody to sell out of a losing position, to buy a position that has more promise. It’s less difficult to switch out of cash into a position that has more promise. So having liquidity in the form of cash and/or bullion, ready to commit when the market makes a pricing mistake is going to be absolutely critical to performance in the next 12 months. https://www.smallcappower.com/articles/interview-with-rick-rule-13-09-20...

Hindsight
Sep 19, 2011 - 5:05pm

APPL & Yahoo

@DPH - I had the same thoughts regarding APPL. I was taking a look at the option pain for October's options contract and maximum pain for sellers seems to be exactly where the price is now, while the max pain for buyers was around the 385 level. It would be a pretty large hit for sellers for the price to remain where it is now or get higher...and you know how much sellers like taking hits.

Has anyone else found themselves incredibly annoyed at Yahoo! and their ridiculous headlines? I know it's known Yahoo! is a joke, but I really can't help looking at them in the same way I can't help but get angry when I see a photo of Rick Perry and Mit Romney "It's Down to Two!" 

"Markets Slide as Investors Worry of Greek Default"-"Markets Rise as Investors Shake Off Greek Default Concerns" - "MARKETS FALL!!! WTF!" "C'mon people, it's just Greece. Markets are just fine. Everything's cool."

Baaad Kittaaay BigChief
Sep 19, 2011 - 5:05pm

Good call Chiefy

.... It is really easy to think we are alot further along in this crisis then we are, and to underestimate how long things can be dragged out by the EE (I think actually incompetent rather than evil though!). Four years ..... Yep could be....... And the metals could get smashed (and i am about 60 odd % in metals). The hard thing will be not to panic. But in the end who knows!!!! Turd does a great job though.. K@

The Vet
Sep 19, 2011 - 5:06pm

Goldmoney and Canadian Banks

One thing I discovered when checking out Goldmoney was while their charges to redeem metal and transfer to fiat was quite reasonable for US residents in USD and to US banks, the charges for Canadians were a magnitude higher. No real reason that I could figure out as electronic transfer to and from Canadian banks is no different to the US system and virtually free in most cases.

That was a few years ago, but if it has changed there in nothing on their web site to indicate it that I have seen,

onealpha austrian12874
Sep 19, 2011 - 5:07pm

Don't ever believe anyone who

Don't ever believe anyone who says that they never confiscated gold from Safety Deposit Boxes. Search the newspaper archives and you will find articles like this one. This is from the Daily Illinois, 1936.

RuNuts Haole
Sep 19, 2011 - 5:08pm

Re: For the SVM'ers out there.

Quote of the day from ZeroHedge: "...Junior miners have driven me crazy. Manipulation both outside and inside, criminal fucks all of 'em. I'am LONG PRILOSEC!!!!"

Shill
Sep 19, 2011 - 5:12pm
The Vet
Sep 19, 2011 - 5:14pm

Big Chief - When SVM goes on sale for $4.00, I'll be in.

It already is. Reserve the number of shares you want by selling a $5 put Dec expiry. Let it expire. If it's under $5 at the time you get assigned for $5 a share less the $1 you already have and hey presto SVM for $4 a share.... (current prices - you may do better than $1 depending on the market).

Of course if SVM is over $4 a share you just keep the $1 a share as the consolation prize and buy your Christmas drinks to celebrate!

Sharer
Sep 19, 2011 - 5:17pm

copper

Was asking about copper last week and one of youse suggested a 3.85 sell point. Well I woke up just now and find it where it is.

should I panic and sell, or sit on the thumb tacks.

austrian12874 Boardwalk
Sep 19, 2011 - 5:26pm

Thank you...great feedback!

First off, thank you to all those that responded.

@Boardwalk: The physical gold and silver my parents will buy will be under my mother's name. She is 63 and will be receiving her Canadian pension shortly. However, Revenue Canada may penalize my mother when she applies for her pension if the Canadian government knows that she is invested in funds like the Central fund of canada or Sprott's funds. The government may penalize her by reducing the amount of her pension. This is why all of my parent's money is deposited in a bank that pays no interest but does not declare the amount of funds to the government. So going this route doesn't seem to be the best option, but it seems most practical.

I will contact Harvey Organ and ask him for his opinion..but I think a 50/50 allocation or 60 gold and 40 silver will probably be the way to go for us, and I strongly considering Goldmoney or a similar reputable provider.

One last thing.....I have 7200 ounces of silver which I bought at about 33 and I bought my stack in Asia. Initally I was 100% in gold but I sold my gold at a 23k profit and switched everything over to silver. I did so on the expectation of silver outperforming gold and also on Ted Butler's advice. With the price action in silver these days I'm wondering if I made the right choice........any thoughts?

The Vet austrian12874
Sep 19, 2011 - 5:32pm

austrian12874 - If.....

  • With the price action in silver these days I'm wondering if I made the right choice........

If anyone here could answer your question with certainty, that's the only post here anyone would need to read ...

surfeitndearth austrian12874
Sep 19, 2011 - 5:38pm

@austrian12574

IMHO,

1. 50/50 G/S

2. GoldMoney

3. Allocated bullion

4. No

5. GoldMoney

RuNuts timpa
Sep 19, 2011 - 5:40pm

Re: WAKING A SLEEPING GIANT

"Barack Obama has plunged the country into levels of debt that we could not have previously imagined." Is where I stopped reading.

Hmm.. the prior 30-40 years of economic policies not to mention the false flag attack/war on Iraq seem to indicate this wasn't all Obama's doings.

IMO, if you're playing the divisive Rep. vs Dem. game you are part of the problem. /just sayin

On the ground report from Greece

The steps were very wisely thought out and implemented by the globalists.

* They made fools out of us
* They turned one against the other.
* They decreased salaries and wages.
* They increased prices of necessary goods.
* They put us into poverty.
* Now they demonize property by implementing more and more taxes
* The next steps are to force us sell our properties to German and Chinese companies, and create jobs in German and Chinese factories for the thousands of hungry.

HFT Bot austrian12874
Sep 19, 2011 - 5:52pm

RE: Fellow Turdites I need your help

3. Assuming you are planning on eventually turning this metal back into cash, I would argue that you aren't looking for the products with the lowest premium. Instead, you might consider focusing on the buy/sell spread ratio. I would add, however, that today's spreads might not be tomorrow's spreads. As an example, I've read that during silver's run-up in 1980, the spread on pre-65 junk rose significantly compared to .999. I suppose that there was enough backlog at the refineries, that the .999 was more desirable.

Boardwalk
Sep 19, 2011 - 5:55pm

@Austrian

CPP eligibility based on net worth is news to me. Pretty sure eligibility is based on income only. What if your mom had that $300K in an RRSP? They wouldn't dock her in that scenario until she started withdrawals.

But WTFDIK, I'm just a guy on the internet Make sure you're getting good investment advice AND good tax advice.

My last 0.02 on this. Scamming .gov is not a very good reason to invest in phyzz. If your moms get's busted, she's going to end up in the hooskie!

redwood
Sep 19, 2011 - 5:56pm

Further to Revenue Canada. 

Further to Revenue Canada. One must declare any capital gain on physical metals, independent of where you bought them. Therefore 50% of your capital gain will be taxed at your nominal rate. On that basis you might consider buying physical in an RRSP with Questrade.

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